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Sunday, 12 November 2006

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David

Send me an absentee ballot.

I have never been in the mother country, but people claiming illeagel resident aliens can vote so why non-resident legal aliens?

As they say around here vote early - vote often.

Hullo, David, has Omelette finished?

Actually, Hank, I was thinking of tapping you up for a set of second-hand voting machines from Florida with all those hanging chads. As you know, I'm very much in favour of hanging!

'Dearieme', no, poor old 'Omelette' has barely begun. Up to the New Year it is all text work - and therein lies an embarrassing tale which I might post about later today. The production is not until March.
http://www.rss-mwt.org.uk/hamlet/

I support the idea of making the tax system more simple, sacking the staff at the inland revanue etc. But I'd still like to maintain some progressive forms of taxation. Something like first 20k of earnings is not taxed at all, the next 20k is taxed at 15%, the next Xk at 30% and so on. Up to a max of 50%. Obviously those figures are just used for the purposes of debate, the principle is people in low-medium jobs are not taxed at all, and those in high paid jobs pay progressively more. I'd also abolish the welfare state and replace it with Citizens Basic Income, as the idea of sacking the DSS staff appeals to me a lot.

However there are other issues with your proposal, for example what constitutes income? Dividends?, Inheritance? gambling winnings? what about the self-employed - do they deduct legitimate business expenses (and define legitimate)? You get the idea. Sadly I suspect the Lawyers will still be in business.

I'd also abolish the welfare state and replace it with Citizens Basic Income, as the idea of sacking the DSS staff appeals to me a lot.

You and me both, though it would lead to people like me in the Welfare Rights racket getting the sack, which is fine by me. I would retain DLA/AA and Child Benefit, they are two useful and easy to administer benefits.

I'm in favour of giving lower paid people tax breaks, however I would be inclined to apply tax from £10k upwards and making the citizens income taxable.

Just to reassure you old chap that we don't want your sort in Yorkshire anyway.

How about no income tax, say 25% VAT and 100% inheritance tax on worldwide assets?

Abolish the concept of trusts and charge 25% on money leaving the UK (i.e. VAT on money spent elsewhere)

This would mean that people don't get aggrieved by tax from their pay packet and the treasury makes money from people enjoying their dosh by spending, which they are incentivised to do because they can't take it with 'em or pass it on.

Furthermore; people won't be able to coast through life on the back of inherited money, promoting a more meritocratic society in the long run.

Henk, I'd like to see your calculations for this, because my feeling is, the books wouldn't balance. How much revenue do you expect to raise, and is it predicated on us all remaining resident here? Personally, if I were enormously wealthy, under your tax regime, I'd simply move to a different country, or barter, or find some tax-efficient way of gifting the money to my offspring during my life. Then you'd have to raise the inheritance tax & VAT from the, less wealthy, people who were left behind.

Sorry for the delay in replying which I will explain in a post up above.

'PS', at least you are capapble of thinking outside your socialist box but I would not agree to progressive taxation. I am a more rabid egalitarian than you and I believe that everyone should be *treated* equally. However as a salve to your socialist leanings, remember that with a flat tax teh rich will automatically pay more cash. Indeed, they will, so to speak, 'volunteer' to pay more tax because the dis-incentives of higher rates will be removed and thus they will be encouraged to try and make even more money. Console yourself with the thought there is more than one way to skin a cat!

As to your final question, all income, however and where-ever derived is taxable with NO allowances! It is precisely the allowances system that breeds the tax consultants. Also, 'no' to inheritance tax becaue that is, in effect, a double tax. However, as soon as the recipient begins to enjoy any income from it, then that is taxed. Before you ask, 'profits' on house price increases count as income at the time they are realised, ie, when Dad pops his clogs and you sell his house for £100K which he payed £50K for, then there will be tax on the difference.

Clairwil, I confess to considerable ignorance on the subject of welfare benefits which is in stark contrast the amount of hot air I expel on the subject. However, your Dear Leader will certainly do two things; first, all benefits will be counted as income; and second I will appoint you, Clairwil, as my minister of welfare benefits so that you might enjoy the exquisite pleasure of sacking all those wretches inteh DHSS.

Sorry, Henk, can't go along with the inheritance tax idea, not only for the reason I stated above but also because it goes against the grain of human nature. It is inherent in our nature to try and build up capital partly to ensure an inheritance for our children. So don't knock it, just tax it as income as and when it qualifies. Also, 'rejoice, rejoice' at the prospect of the idle rich spending their inheritance away because they will be buying things, things which have to be desinged, made, transported and sold with everyone along the line earning a profit!

As to Trusts, as I have said, there will be no exceptions or escape clauses (and therefore no Trust lawyers, heh, heh, heh!). However, I would certainly not tax money *leaving* the UK. It's fine with me but anything earned by that money overseas will be taxed as income.

Your Dear Leader will need to think about VAT. In some ways it is a very inexpensive tax to collect because it is businesses that do the job for the Revenue. On the other hand, it is subject to enormous cheating and fraud. The Dear leader will pronounce in due course!


David,

'no' to inheritance tax becaue that is, in effect, a double tax.

This is an old myth, ably refute by Andrew Bartlett here: http://bartlettsbizarrebazaar.blogspot.com/2006/03/double-taxation-double-nonsense.html

And even leaving that aside, I you presumably believe that inheritance should at least be taxed as income ("all income, however and where-ever derived is taxable with NO allowances").

"PS', at least you are capapble of thinking outside your socialist box"

That must be due to the fact I'm not a socialist.

David,

The idea behind the 100% inheritance tax is to encourage people to spend their money (thus boosting the economy of the country). This does not mean people can't care for their children; they can still use their earned income to pay for them to go to the best schools, get piano lessons, whatever.

I realise that this leaves the nasty dilemma of "what happens if mummy/daddy dies in a car crash" and I'm afraid you'd have to have to make the tough decision of saying that's hard luck. After all is it any fairer that a poor person's child has to go to a bad school because they can't afford the fees or a house in the right area because they were poor to begin with?

Re: money leaving the country, I meant anyone moving away from our tax jurisdiction; not going on holiday or buying shares in foreign companies or a holiday home etc. The 100% IHT on worldwide assets would catch those things. The aim here is to stop people emmigrating just before someone dies to avoid tax.

Hilary - you seem fairly clued up on the system so I'm sure you're aware that the richest people do avoid an awful lot of tax (one of the best scams being to move around so often that you are never resident long enough in any one country to be subject to most taxes). To my mind VAT is the most effiecient way to collect tax so why not put the burden there? I haven't done any sums so maybe the rate would need to be higher, but waving a damp finger in the air I reckon if you could capture all of everyone's productivity at 25% you be there or thereabouts.

In respect of emmigrating - that would be fine. Just pay the 25% (or whatever VAT rate works) you would have paid if you'd spent it all here.

in respect of tax efficient gifting - this is mostly done using trusts, which I suggest abolishing and I would also set the lifetime rate of IHT to 100%. You can pay the rent on your kids' house, but you cant buy them the house.

Dear me, Henk, I don't know what school of economics you belong to but it is usually considered sound practice to encourage people to save because, of course, savings go into investments and that adds smiles all round!

And please don't mention the 'F' word in this discussion on economics because you know full well that there is no such thing as 'fairness' in this area of human activity.

Also, you don't seem to realise that the freedom of people to move around the world is one of the very few brakes on the insane tax and spend ambitions of governemnts everywhere. In memory of a truly great man, let us stand up for "Free to Choose"!

Sin of sins, I almost forgot the good 'Dr. Teabag' who uses that amiable 'Trot-lot' buffoon, Andrew Bartlett, in support of Inheritance Tax. On comic books, I am reliably informed, Bartlett is very sound, on anything else, particularly anything political, he's as daft as a brush. I only read the first few lines of his supposed refutation of the *fact* that accumulated capital passed on by inheritance has already been taxed, and instantly spotted one howler. I wonder if anyone else can see it? Larry supplies the link a comment or so above.

However, I cannot find it in my heart to be rude to the good Doctor who has promised me his vote which I accept gratefully, if gingerly! I may promote him to Minister for Sums and put him in charge of mathematical teaching in my new schools regime, of which, more later.

It's spending that drives economies. If everyone saves, the companies that form the basis of the smile-making investments don't get the sales they need and the investments therefore don't get the returns. Not so smiles all round.

But Henk, there's spending and spending! Government spending is obviously a huge part of any economy, although it will rapidly decline under my regime! More important is business spending, much of which is for investment purposes. However, you are right to say that private spending is important and my overall lower tax take (because government spending will decrease) will help as individuals are forced to provide more products and services for themselves.

You are also right to say that too much saving (as per Japan in the last ten years) is also harmful. You need a nice balance between the two and that is why your double-tax on inheritances is a bad thing.

I did suggest it in combination with 0% income tax, so it's not really a double tax and IHT is not a tax on investments unless you hold them until you die. If you make money from them and enjoy that money by spending it you would avoid the IHT entirely.

Either way - I like the cut of your jib, so you can count yourself another vote...for now.

"I like the cut of your jib, so you can count yourself another vote...for now."

Sir, you obviously a man of taste and discernment!


"capital passed on by inheritance has already been taxed"

Of coure it has - when the parent acquired it as income. It was also taxed before that when his employer acquired it as income, and before that, etc. So not just double-taxed but infinitely many times taxed! But why shouldn't it be taxed once more when the offspring gets it?

No, Larry, employers do not pay employees out of taxed income, they pay it out of profits before tax - but you win the prize for spotting Bartlett's 'Boo-Boo'.

If an individual accumulates capital it will have been taxed and he do what he likes with it. As your Dear Leader for Life (see how my ambition grows!) I will only tax the income that results from that capital - interest, dividends, whatever.

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